Disney is bringing out the ax again, laying off several hundred employees worldwide on Monday (June 9), primarily in its entertainment division: film, television, and corporate financial operations. The firings may seem a routine move to cut costs, but is there more to it? How often can one company strip staff and consolidate businesses while keeping the ship upright?
Disney’s Dizzying Ups and Downs
Compared to 2022, the Walt Disney behemoth appears to be doing well, reporting profitable quarter 2 earnings (better than expected) in May. It also recently announced plans to open its seventh theme park, this one in Abu Dhabi. Despite plans to expand experiences, the company’s move to downsize other departments is its fourth round of layoffs in the last ten months. Nevertheless, this action comes nowhere near the 7,000 employees fired in 2023 after Bob Iger returned as CEO to cut $5 billion in costs.
During Iger’s brief retirement in 2022, Disney’s stock plummeted to historic lows and didn’t regain much footing in 2023. Film flops and Disney channel subscriber losses worsened the situation. It tried to offset the losses by raising prices at its theme parks, but the price hikes led to pushback, and attendance declined. Furthermore, the company’s leadership issues did not inspire confidence in investors.
Once Iger stepped back into the CEO role, cost-cutting became the name of the game, especially within the company’s traditional media. Aside from thousands laid off in 2023, Disney Entertainment “underwent a round of staff cuts [last July] that impacted roughly 140 people, representing about 2% of the total workforce, 60 of them at National Geographic,” explained Deadline, a go-to source for entertainment news. In October, the Mouse House folded ABC Signature into 20th Television and merged parts of ABC and Hulu Originals. Then it dropped roughly 200 employees in March, “representing almost 6% of the workforce in the ABC News Group and Disney’s entertainment networks, including Freeform and FX.”
What’s really behind all the shuffling and cost-cutting?
The Tea Leaves
Because layoffs are rooted in business as a quick fix to shrink costs, “managers ignore the fact that they create more problems than they solve,” said Sandra J. Sucher in Harvard Business Review. “Today layoffs have become a default response to an uncertain future marked by rapid advances in technology, tumultuous markets, and intense competition.”
Sucher’s article, published in spring of 2018, detailed the often-overlooked aspects of layoffs. She quoted several studies, some of which suggested layoffs “had a neutral to negative effect on stock prices in the days following their announcement.” Other findings indicated that, after layoffs, “a majority of companies suffered declines in profitability” and that “the drop in profits persisted for three years.” Disney was suffering financially until last year when profits started to rise again, but, as some studies have shown, companies that lay off workers are “twice as likely to file for bankruptcy as companies that don’t have them.”
It would likely take a catastrophic event of some sort for Disney to go bankrupt, but what will be left of it in five or ten years if it continues to shed more jobs than it replaces? Also unhelpful have been the backlash and financial hits in response to its DEI practices and “woke” movies, such as the live-action remake of Snow White with its controversial star. That likely contributed to the movie’s weak numbers at the box office, “grossing $205.5 million on a budget Forbes estimated at around $300 million,” claimed The New York Post. Following the movie’s bust in sales, some critics crowed “go woke, go broke.”
Back in February, Disney announced it was scaling back some of its DEI practices, but the effort thus far seems like a smokescreen. It reportedly said it would change some content disclaimers that it started in 2020, including the “controversial Reimagine Tomorrow initiative, and the corresponding website, which was used to highlight stories and talent from underrepresented communities,” explained Axios. But what some investors wanted is for the company to stop participating in the Human Rights Campaign’s Corporate Equality Index, “a yearly survey which grades corporations on their compliance with a litany of LGBTQ initiatives,” said Fox Business. Included in the practices: “‘Equal health coverage for transgender individuals without exclusion for medically necessary care’ and ‘Integration of gender identity and sexual orientation in professional development, skills-based or other leadership training that includes elements of diversity and/or cultural competency.’ Disney has had a perfect score on the Equality Index every year since 2007.”
Yet according to the CEO, Disney’s “primary mission needs to be to entertain, and then through our entertainment to continue to have a positive impact on the world,” said Iger during an annual shareholders meeting in 2023. “I’m very serious about that. It should not be agenda-driven, it should be entertainment-driven.”
Nearly two years have passed since he made that comment, but so far the “woke” agenda still seems ingrained in Disney’s television and films. If we’ve learned anything since the previous presidential election, it’s that most people are tired of DEI and pride propaganda. If the House of Mouse continues to embed progressive ideologies in its films, there’s a good chance it could suffer further losses and have to shrink other departments. Perhaps it should study what made the entertainment juggernaut so popular in the early years. Otherwise, at some point, the “restructuring” could wind up being as practical as rearranging chairs on the Titanic.
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